tv Bloomberg West Bloomberg November 21, 2014 11:00pm-12:01am EST
>> live from pier three in san francisco, welcome to "bloomberg west" where we cover innovation, technology and the future of business. i'm emily chang. president obama hit the road to drum up support for his immigration plan. he spoke at a high school in las vegas. >> when i took office, i committed to fixing this broken system and i began by doing what i could to secure our borders because i do believe in secure borders. over the past six years, illegal border crossings have been cut by more than half. do not let all the rhetoric fool you. >> we will have more on how the immigration proposal impacts
tech companies. a federal judge says she will give final approval to apple's settlement in the ebook price-fixing case. they will have to pay $450 million to as many as 23 million consumers. about $50 million of that is for lawyers fees. if its appeal is successful, it could be reduced to nothing. fcc chairman tom wheeler dropped some hints on net neutrality. he says he wants to make sure that the new open internet rules are legally sound and will withstand challenges. he says he wants to write the rules quickly although the fcc has previously said the process will drag into next year. turner broadcasting channels like cnn and cartoon network are back on the dish network, at least for the next few months. this comes after the companies reached an interim deal in their heated dispute.
the short-term agreement will keep the channels on dish while companies try to reach a long-term solution. cory johnson has the lead story. >> now to the lead -- president obama's plan for immigration reform was not the widespread overhaul the tech industry was hoping for. notably absent, expansion of the h1b visa program for highly-skilled workers. the president did propose letting foreign-born students and recent graduates in the tech field stay in the united states for more than two years. the president will direct the department of homeland security to make it easier for foreign-born entrepreneurs to work in the u.s. how will the immigration plan impact silicon valley and the city of san francisco? i spoke with former san francisco mayor willie brown to see what he thought about the president's plan. >> i think it was long overdue. it was how many months ago the u.s. senate by a large partisan
vote, 68 senators, said we should solve the problem and here is the way we can solve it. the house leadership would not allow even a debate to take place. the president needs to get the dialogue going. his action prompts that. >> there is a lot of criticism still raging about the use of an executive order to do this because he could not get something through congress. in particular, right after an election when a lot of pro-immigration reform candidates lost. >> the question is not so much about whether or not he is using the executive order or because he cannot get something done in congress, he is using the executive order the same way the executive order has been used by all the presidents in this issue. politicians are amazing -- >> you would say that. >> they are very reluctant to do
anything that is really earthshaking and controversial. with 12 million or more people in this country and with five or six million of them in categories where they should already be in line -- it is amazing how members of congress will not do that. the president is empowered to respond to questions and problems and that is why you have executive orders. he is exercising that privilege period. he has done it within the context of what the u.s. senate has already passed. he also said, you want to act? you act and i will take my executive order back. >> republicans have been supportive of the program that lets people come into this country from overseas and work in technology particularly. from a political standpoint, you brokered a lot of deals in sacramento with very contentious people -- leaving that thing that both republicans and the tech community and democrats want to see happen hanging out there, do you see that as a negotiating ploy? >> it is part of the leverage. you understand what the president did by virtue of his
conduct was to say that people who were born here to parents of those who were illegaly immigrants so to speak, that birth gives you a right. we should keep that family together. while i am not giving them citizenship, i am allowing them to declare themselves, pay taxes, fill out the forms, and get in line and wait for the opportunity to be a citizen. that is an appropriate thing to do. clearly, the sexy performance category of high-tech workers getting special visas, that is something that everybody can sign on. the president is going to be willing to trade his signature on that for the consideration
for these people who have no leverage. >> it is interesting that his focus on poorer people or people without the means to lobby and not so much the economic impact on workers which i think a lot of people thought they might hear from him. >> he did not do anything to slow down the process by which tech workers now qualify. he just did not do anything to accelerate it. in the tech world and some republicans' world, you accelerate that because we are
picking the cream of the crop produced in other nations to allow them to work and be productive in our nation. by the way, it applies not only to that crowd, it applies to people in the health care world. all of that leverage needs no one to speak for them. these people who mr. obama spoke for last night are people who need a voice. >> we have some sound from president obama's speech last night. let's listen a little bit. >> the actions i am taking are not only lawful, they are the kinds of action taken by every single republican president and every single democratic president for the past half-century. to those members of congress who question my authority to make our immigration system work better or question the wisdom of me acting where congress has failed, i have one answer -- pass a bill. >> that really speaks to the politics and tone in washington right now. >> i am sorry he did not do this six or eight months ago. why would you leave it out there when the senate has already passed it. >> why didn't he do that? >> i think president obama is an incredibly cautious executor, so to speak. he really tries his best to allow people to reach a consensus before he steps out of there. he has never been known for being the guy that initiates the
action before there has been any real serious discussion. he is now in a position with two years left where he needs to do it if he is ever going to do it all. >> for the technology and businesses who want to keep employees here, him waiting six months is a big deal. the companies miss a lot of opportunities. >> it is a long time coming, but it is here. he should've done it months ago. >> former san francisco mayor willie brown. coming up, aereo is filing for bankruptcy. will another player step up to disrupt the tv industry? we will discuss that next on "bloomberg west." ♪
>> i am cory johnson and this is "bloomberg west." the iphone 6 and the iphone 6 plus went on sale back on september 19, but many customers are still waiting to get their grubby hands on the device two months later. the 16 gigabyte iphone 6 plus is now shipping in an average of seven to 10 days in the u.s. but, some stores are taking an average of three to four weeks. does apple have a serious supply problem here or is it about demand with the holiday shopping season right around the corner? joining me now is gene munster in minneapolois specifically, i ordered -- no diss to our android friends -- i ordered the iphone 6 plus and it took me like six weeks to get that thing.
is that a common experience? >> it is. there are certain carriers that have better inventory, but it has been really tight. the reason is the demand seems to be better than what people had thought. it is always hard to figure out which is what driving. one thing we can do is just measure at the apple stores how much inventory they have of phones. typically, two months after a product launch, they should have 100% of the skews in and right now it is about 60%. it is still lagging. surprisingly, two months after the release, it is still not widely available. >> are there certain components in the iphone 6 and iphone 6 plus that suggests to you it is not a supply issue? that it is commonly available? >> the components that they have -- i think the components are relatively easy. based on some of the comments that apple had in the last conference call, they didn't say there is any issues they had on the production side. there was not anything that was dramatic on the component side. as of the third week of october,
things were fine. unless something really short-circuited in the last few weeks, which is unlikely, i think it is probably driven by continued healthy demand. >> is the six plus worse in terms of supply than the six? what does that mean for apple's margins? >> more recently, we've actually seen the six plus supply improving and the six supply is actually tighter. what we think is going on is that if you look at the early adopters tend to spend a little more and get the bigger form factor. i think we are slowly going into more mainstream. that is probably why you are seeing a little better availability of the six plus and a little tighter availability of the six. ultimately, a year from now, it is probably going to be 60% to 70% of units are going to be the smaller iphone 6. >> and the smaller margin? >> the margin is comparable. it might be fractionally lower.
the gross profit dollars are less with the six because the asp is lower. in apple's case, they are happy to sell either one but they would be happier to sell you the six plus. >> does this matter for apple? were they going to sell everything they made during this quarter anyway or do you think this is material enough that they will have a much better quarter? >> there is a governing factor on how big the december quarter could be and that is the supply side. i think the idea of having some gang buster december is probably not a reality. they probably had a good sense of what they can produce when they gave that guidance back in october. the reason why this is important is because this really pushes the cycle into 2015. for investors, that is the big question. when to get off based on when the peak of the cycle is.
having another potentially strong quarter with march is something that is material for investors. >> that quarter is often weak -- apple doesn't have weak quarters at all anymore -- among the weaker quarters for apple historically. >> usually we see that march quarter as a big step down. especially this year where you have the china launch, there is not a ton of catalyst happening. getting some of this demand really shifted over into the march quarter should be positive. what it comes down to is their guidance for march should be more optimistic than what is expected. we will get that in the third week of january. >> we shall see. it is an interesting story. gene munster, thank you as always. coming up, where do you go to test out a new idea to change
>> welcome back to "bloomberg west." i'm cory johnson in for emily chang. many social enterprises, for-profit companies, are driven by a social mission. they are finding their startup capital through crowdfunding. the crowd is looking for more than financial returns and maybe the funding vehicle needed to get some of these great ideas off the ground.
i asked indiegogo's co-founder and chief development officer danae ringelmann about the kinds of campaigns she is seeing on the crowdfunding platform. take a listen. >> we are seeing a broad spectrum. we are seeing social innovators, inventors using indiegogo that want to launch their products and businesses. we have seen musicians and artists using indiegogo to go on tour. we are seeing a lot of nonprofits and individuals asking for money for personal causes like paying for a funeral. >> i want to focus on the social impact. it seems that venture investors are fundamentally seeking a return. the investors you are bringing in are sometimes seeking more than that. they want to do good and do well. we all want to do that. it's interesting those sort of investors you're seeing. >> we are seeing campaigns like a young company creating dolls that are emulating scientists. their launches on indiegogo. >> barbie was not a famous female scientist? >> apparently not.
it is quite exciting because they have used it as a platform to connect with their funders about what doll to create next. like the first african-american female pilot in america in the 1800's.. >> they have such a love of their story for the american girl dolls but they are fictional stories, not -- >> great, pioneering women that we have not heard about. >> talk about kite patch. >> kite patch is an amazing idea. it is a patch that is on your shoulder. it emits a scent to make you invisible to mosquitoes. it is an alternative to the mosquito nest in the developing world. they really launched the brand and product into the market. >> are these the kind of ideas that would not get venture backing? what is it about this platform that are bringing these
investors? >> it is actually not investing, it is contributions in exchange for perks. there are four different reasons why people use indiegogo. we call them the four p's. people, passion, participation and perks. the first two are more altruistic in nature and the second two are more selfish in nature. it unlocks all the motivations and that is why you see so many social impact businesses being very successful. >> we have a fifth p. phony. when i was an investor, i wanted to find short stakes, frauds, failing businesses. when i look at this platform, i am concerned about the possibility of companies that come up with magical things. do you -- i understand the legal ramifications, but what you do to get rid of that? >> we believe in open -- giving everyone an equal opportunity to get off the ground. we built the fraud infrastructure in the backend to catch anything suspicious. we use data science to do all
that. we know that we are unleashing new ideas and innovations with the definition of creating something new that has ever existed. >> there have been criticisms of companies. like a company that has a very controversial campaign that didn't do what it was thought it was going to do. there is suspicion that people use other things like promise magical cures or something to raise money and take the money. >> i think it is all about being transparent. we want to talk about what your goals are, what you are trying to achieve and why you are raising money this way. we use it as a way to get feedback as whether it is a product people actually want. it is a very open ecosystem. nobody is forcing anybody to
fund. if it is something that is too out there and not quite comfortable with the science, they don't need to fund. but, if they are very excited, they should have every right to fund it. >> funder beware. >> funder know what you want. reach out to the campaign owners to understand the plans to see how they are trying to achieve it and create breakthroughs. >> when you look at the social campaigns that have happened, what does that do to -- how do you make more of that happen? >> we continue to share everybody's stories. leave the campaign open so people can educate their funders on the status of the project. we encourage the community to form ideas and be part of the next product. >> that was that indiegogo cofounder and chief development officer. amazon is changing the rules for workers at its warehouses but still faces demands for better
>> you are watching "bloomberg west" where we focus on innovation, technology and the future of business. i'm cory johnson. oh, no, aereo. it looks like their quest to disrupt the tv industry -- they are toast. the online streaming service filing for bankruptcy protection. last june, the supreme court agreed with the broadcasters that aereo's service violated program copyright protections. joining us is david bank. david, this aereo thing has got a lot of attention. consumers seem to really love this thing. what is the lasting takeaway of the end of aereo? >> i think it was a really interesting product from a consumer utility perspective. i don't know how many subscribers there were
ultimately. i think the court documents discussed some of the subscriber base. it showed it was not enormous. i think that change in the media ecosystem is painful. there is clearly an innovator's dilemma. it seems to come from outside the system. i think aereo's contribution was probably a push. a push to continue to make the media evolved to see some of these à la cart products. cbs all access, over-the-top products. could that have been a catalyst or even the hbo over-the-top products? i think they were a catalyst but ultimately, you know, they were sort of -- they didn't fit within the regulatory landscape, but maybe they helped to push change the regulatory landscape. >> i wonder if it is regulatory
or the businesses themselves. the networks try to keep people from consuming their service in the way they want to consume it. i wonder how long they could fight that off. is there another aereo around the corner or is the way they died scare any potential followers from doing this again? >> look, if consumers really want to consume the broadcast networks on a standalone basis, they could just put rabbit ears up. i think part of it was really about a lighter bundle. what if i just want the broadcast networks and don't want the rest of cable and want the utility of modern distribution? a dvr. i think you are starting to see some of that. charlie urgen will launch his
personal subscription plan on dish. you are seeing the sony platform and rumors of others for some of the telecom players. i think they are being pushed. i don't think they would be evolving without this kind of disruption from outside the system. ultimately, the consumer wins. the existing ecosystem pushes back as hard as it can and then the consumer wins. i don't think the guys at the telegraph company were thinking like, whoa, we need a bunch of telephones. >> my big buggy investment is not working either. we talked to chet kanojia about this notion of the consumer demand back in march. listen to what he had to say. >> my last company was a company that created technology for measuring viewership. we used to collected data from millions of homes. when you start looking at the
data, it was shocking that a majority of the people watch seven or eight channels and half of them happen to be broadcast television that are free to air. prices keep escalating, technology does not keep pace. people are consuming more content online. people are cutting the cord and expressing their interest in moving away from the traditional model. >> what is interesting to me is he went after the belly of the beast as opposed to nibbling around the edges in a way of maybe uber might. i wonder if that approach of dismantling a big regulatory environment is destined to fail. >> when you think about the players involved -- barry diller was ultimately the money behind
this. i think barry was not afraid of a big battle at the expense of some massive disruption. they were all ready to live with a really binary outcome with the promise of massive disruption. they didn't bite around the edges, they took the big swing. but, there was a potentially fabulous binary outcome for them if they were right. i think they are willing to live with the risk of being wrong. what chet was saying was probably correct. the average consumer does really probably watch the bulk of its content through eight or nine channels, the issue that you have -- i think the flaw in the logic is that those eight or nine channels, most probably do watch the broadcast networks. those other five channels are different for everybody else. it is the bundle. like my five are different from your five. without the bundle, it is really hard for all these niche channels to exist. that is the challenge. at the end of the day, some of this is a solution looking for a
problem. the bundle is a pretty good solution. >> david bank, thank you very much. here is a question. are labor disputes surrounding amazon warehouse workers impacting the bottom line? that and more when "bloomberg west" returns. you can always watch us streaming on your tablet, phone, bloomberg.com and amazon fire tv, if you are so inclined. ♪
>> you are watching "bloomberg west." amazon has just settled a complaint with the national labor relations board. they agreed to change its rules to allow warehouse employees to communicate about pay and talk about their own work conditions without fear of retaliation. the u.s. supreme court considers a separate suit over whethere amazon workers are considered to be paid for security checkout lines. brad stone, author of a great book called "amazon: the great story," is joining me.
as well as new york university school of law visiting professor zev eigen. zev, let me start with you. is this a notable decision or settlement? >> it is notable because these provisions are ubiquitous. one of the parts of the settlement requires amazon to change and update its code of conduct which is overbroad. it prohibits employees on its face from talking to anyone for distributing unauthorized information to people who are not authorized. on its face, it would prohibit them from talking to unions about their pay and the terms of their work. those provisions are ubiquitous. a lot of employers have those terms in them. the fact that this settlement is news and there are a lot of employers with those kinds of overbroad provisions, i think that is a piece of interest. >> maybe this resonates beyond amazon. those provisions are ubiquitous. a lot of employers have those terms in them. the fact that this settlement is news and there are a lot of employers with those kinds of overbroad provisions, i think that is a piece of interest.
>> maybe this resonates beyond amazon. the culture of amazon is fascinating. you can see amazon going big into these things. when you go to these the division centers, fulfillment centers, it is anything but. the first time i visited any of these massive warehouses with row after row of stuff and people walking miles, tens of miles a day picking these things and putting them back in, it looks like backbreaking, exhausting work. it made me thank god i went to college. >> i don't think this brings those workers any closer to unionizing. what we have seen over the past 15 years os amazon paying any unionization effort tenaciously. hiring law firms, making his case very strenuously to
workers. you have to figure how they are set up. they have 40,000 workers in the u.s. but they hire 80,000 temporary workers during the holidays. there is a vast reservoir of replacement people back and take your job if you talk to the teamsters. there was a group that tried to unionize earlier this year in delaware and they got crushed. the vote was 21-6. you are not on very stable ground. this will increase the education of workers rights but i am much or amazon will be that much more vulnerable. >> i completely agree with that point. amazon has worked very hard over a very long time to prevent unionization, even very small ones. the machinist union has tried to gain toehold. again, amazon takes those
toehold efforts very seriously because they see them as being chips that could be laid out for future effort. you can say this particular one even though it was not anything big -- this was one employee in an arizona warehouse that complain about the fact that he was reprimanded allegedly for complaining about lack of security in the parking lot which affects a lot of people in the warehouse and their security. he also complain about these overbroad policies. you can say that is not really a victory and even though they settled it. you can say it is a nice toehold for unionization efforts because it shows with one person and minimal effort, they got the mighty amazon to capitulate in certain respects. that is a nice toehold. you can see past efforts being unsuccessful and this being a little more successful. i don't want to sound too optimistic. >> wide as amazon -- why does amazon have roles that they
can't let a guy talk about parking lot security? >> they are very fearful of any unionizing action. they would say they prefer direct relationship with their employees. they are relying on $13 an hour wage on a very low margin business. they like to hire up nd staff after holidays -- and destaff after holidays. they don't have that lets ability if they are unionized. >> is that more enough of a threat? there are robots. they bought this robot company. what the you make of the move to use robots and automated their factories? >> robots probably complain a lot less about lack of security. that is one way that amazon would on its face if they replace employees with robots,
they would prevent the problems of unionization. amazon is more bricks and mortar that a lot of people think. they think of amazon is an internet company but they do have a lot of employees nationwide. fear of unionization is something that will drive them towards creating robots -- a robot workforce. i think that is not what is driving them. there are other costs that are associated with human capital. the fear of unionization is probably not something that is pushing towards that effort. >> i talked about what it was like for me thinking about my nyu education when i saw the fulfillment center. what do you see when you see that? >> they are not so fulfilling. i am happy that i am not working there.
they are difficult jobs. this might be an instance where we think the collective voice in the workplace is a good thing because these are people that might not be able -- on their own represent their interests. amazon is not unique in their response to unionization efforts by saying you don't want a third-party intermarry coming between us. it is like a lover saying, no, keep it between us. which i find very odd and very weird that a company could think that this plea would work. it should just be between us. i find that odd that anybody would find that an effective argument. >> new york university professor and brad stone. thank you. agriculture. we will introduce you to one startup that is hoping to soften some of the world's food challenges by growing plants in the air. that is next. ♪
you play a major role in improving the nation's food supply. this is the year ahead. >> we truly believe disrupted technology for the farming industry. we are talking about feeding a planet -- 8 billion or 9 billion -- we need a new paradigm of how we grow our food. this is it. this is the future. >> inside an old nightclub in new jersey, they are on the verge of an agriculture revolution. >> we can take that seat and grow it in 16 days which otherwise takes 30. we have 22 crop turns in the year. we can do that using 95% less water. zero pesticides, fungicides. >> they are using it by doing a
system that plans grow in mist. >> we have a trade that is covered. this froth is our growth medium. >> 24 to 48 hours later, that tray is sent into vertical farms and moves further through the system as the plants grow bigger. >> they are given very specific spectrum of light. where optimizing oxygen, carbon dioxide, ph, relative humidity to create a perfect growing environment for the plants. >> beneath the lights and greens is a system of nozzles that spray mist. just over two weeks after the process began, the plants are ready to harvest and be eaten. >> we have grown 230 different products. the taste is fantastic.
we optimize for taste and texture. if you want a peppery arugula, we're looking at all those factors. >> right now, a vast majority of leafy greens in the u.s. are grown untraditional forms in california and arizona. plants are doused with pesticides which end up not only in our food but in our environment. >> about 70% of our freshwater contamination comes from agriculture. it is the runoff of all the fertilizers and pesticides that go to our freshwater streams that lead to outdo blooms, dead zones. >> right after harvest, leafy greens require immediate refrigeration and shipping all over the country. it is a flawed system that high rates of spoilage and contamination which is why they are bringing the farm to the city.
one of the company's vertical systems is already in use at phillips academy charter school just across downtown newark where growing leafy greens outside in winter is impossible. >> we are harvesting the plants right now. we are try not to get a lot of stem. >> we are about enabling local food production at scale. a high trend towards urbanization. >> it really taste like grown locally to a new level. >> they are going through a massive expansion. they are currently converting an 80,000 square foot factory into what will become the world's largest vertical farm. they say it will produce enough leafy greens for 80,000 people. it is not cheap and that is the big challenge. >> depending on the size of the farm, it could be $10 million or $20 million when you take in the
capital of the farm. >> it is a cost that is cap of them out of the places in the world that may need it the most. >> the technology is a viable technology that works. we will do everything we can to make it available all over the world. >> for now, they are keeping their focus at home trying to reach local customers only a few hundred miles from the new facility. in 2015, they will be launching a branded part sold at places like this ensuring that your peppery arugula was picked just hours earlier. >> that was sam grobart. you can watch the special all weekend. it is time for the bwest byte, one number that tells us a lot. my special guest is nick evans. what is the number? >> 10 is the number -- number of rainy days in san francisco. potentially, the number of umbrellas you have if you cannot find one. >> i have this umbrella here with this logo on it.
it is a cool little product that has a chip in it. what is with the umbrella partnership? >> we partner with blunt umbrellas. they are trying to make the world's first smart umbrella. often people leave their umbrella somewhere. >> when i was a cab driver, my friends would come to my place. i would have dozens of umbrellas whenever it was raining because people leave it in the back of their cabs. you are putting your technology and other things. >> we believe if you purchase something, you should own it. you should be bold to find it when you you want to use it. >> thank you very much. good stuff as always. you can watch more of "bloomberg west" throughout the day and evening. we are on during the day. thank you for joining us. ♪ >> the following is a paid